QUESTION$/$ SOALAN

Common stock is part of the shareholders' equity of a company.

$($a$)$ Pelangi Bhd$.\text{'}$s dividend is expected to rise steadily. Next year, the dividend is expected to be RM$1$ per share and increase by $5\%$ every year. Calculate the current value of the share if the required rate of return is $10\%.(5$m$)$

$($b$)$ Calculate the price to book value, when the market price per share is RM$6\mathrm{.}60$ and the book value per share is RM$5\mathrm{.}50.(4$m$)$

$($c$)$ An analyst has conducted some research on the consumer product sector and found that the prevailing price$-$earnings ratio for next year will be $10.$ If you agree with the evaluation, and estimate that the earnings per share of Arora Bhd$.$ for next year is going to be RM$0\mathrm{.}50,$ calculate the prospective price of Arora Bhd$.(5$m$)$

$($d$)$ Explain the differences between par value and book value per share by providing anappropriate example.$(6$m$)$